I need to set up employee deductions for benefits.  These are non taxable.  The company will be paying 50% and 50% is to be by employee deduction.  Not sure how to link accounts.  Thanks for any help you can provide.

Hello suary,

To create the benefit go to Setup, Settings, Payroll, Income and create the new income type and set the type to Benefit.  If you do not want to calculate tax, remove the calculate taxes check mark.  Remember to link an account in the linked accounts field.  There is a Knowledge Base article on How to Create a Benefit so check that out.

The second half of the equation though is recording the employer's share.  If you are using the Premium version of Simply Accounting or higher you would record the employer's share as a User-defined Expense.  This accounts for the employer's share only (you still need to record the benefit for the employee as an income!)  There is also an article on this so just click the links I've provided.

The last article I will refer you to on this topic (I promise!) is an example of creating a group RRSP which explains that you need to first record the benefit (very important), then create a deduction (this would be applicable in your scenario as you want the employee to pay a portion) and then creating the User-Defined expense.  I know it seems like a lot of steps but once it is all set correctly it's a very user friendly way to process this type of transaction.

Good luck!

Hi there:  If the "benefit" is non-taxable then NO amount needs to be added to the employees pay as a benefit.    The only thing you need to do is to set up a link for doing the deduction from their pay for their portion.  What you ideally want to have is a set up where everything you need is going to the correct accounts so that the employee portion and the employer portion of the amount to be paid each month is being set up in a liability account -- for instance -- Whatever Benefit Payable account.  You will also need an expense account set up in the expenses section of the Chart of Accounts -- for instance -- Employee Benefits Expense.

Then what you need to do is in Setup, Payroll, Deductions you need to set up a line -- say it's Deduction 1 -- so that line is linked to the "Whatever Benefit Payable" account.  When you do the employee's paycheque, when you open the "Deductions" tab you can enter the amount to be deducted from the paycheque.  The journal entry should show the deducted amount going to the Payable account. 

What that will do is to set up the 50% portion of the employees contribution to the amount payable each month.    For the 50% that the Employer has to pay, you will need to set up a recurring entry in the General Journal to record the required amount as a Debit to Employee Benefits Expense and a Credit to Whatever Benefit Payable account.   That will finish off the setup of the payable for each month and get the employer portion expensed.      Then when you do the payment, you can go to the Payment window, choose Make Other Payment, and proceed to do the cheque for the 100% amount and the entry will be a Debit to Whatever Benefit Payable account and a Credit to Bank.  

This is one way of setting it up that will work.  The important thing is to set up the deduction from the employees paycheque WITHOUT including it as income as it is a non-taxable benefit.   So it does not need to appear in income to the employee, just a deduction for their portion.       Let me know if this is not clear.    Rita Deering